Archive for September, 2009

Recently I was presented with the opportunity to review a rather mundane new food product. The offering was a barbecue sauce. The taste was excellent, formulated from an old family recipe. The entrepreneur was in love with the taste, the appearance and the history of the product. It did have excellent presence. But, it did not have enough to be commercially viable as presented. Why?

In order for any new product to be successful the item must offer a clearly recognizable Unique Selling Proposition (USP). A USP is a fancy business school term for the special features and/or benefits that make any new product different, and hopefully better, from competitor’s wares. These features and benefits create the differences that enable a product to have an excellent chance at success.

My barbecue sauce review was not positive, not from a sauce standpoint, but from a marketing standpoint. Better ingredients, better recipe or formula, better components, better appearance or taste, or Mom made it so it has to be good are not difference makers. They are claims that every brand makes, and most brands already being successfully distributed support such statements with big sales promotion budgets. Most start-ups and entrepreneurs do not have the ability to shout their story with any strength in a competitive marketplace. We had to address these issues before moving forward on the project with any hope of success.

What to do? In order to create a USP for a new product the entrepreneur must tell a story that creates separation between the new offering and the competition. In the case of the sauce we reviewed, we suggested a duality strategy, an ingredient provenance and process story.

We highlighted the two most distinctive herbs (signing a Secrecy Agreement, which we do with all products we review, does not allow me to be specific about details) and suggested that the product marketing be built on the nurturing, harvesting, artesian craftsmanship of the agricultural techniques utilized and the specific unique geography, topography and climate necessary to derive the luscious taste from the products most influential ingredients.

Then we suggested that the sauce be positioned as a 19th century, hand blended, slowly layered product, cooked in small batches in a copper kettle, under very low temperatures. This is the process feature that further separates this sauce from the other mass produced products that are indigenous on store shelves and offer the sameness of taste and blandness of character that make them virtually inseparable in consumer’s minds. We created a process nomenclature unique to this sauce’s recipe and gave it a proprietary cooking terminology (again, under Secrecy Agreement).

Now the sauce has a provenance and process story that is simple, understandable and stands apart from the mass marketed competition. The product can be positioned as an upscale alternative, the kind of product that discriminating homemakers will be open to trying. The sauce is being readied now for a spring 2010 market launch in gourmet shops and high end gift stores.

This is an elementary example of a product from a most mundane category that can be positioned to highlight a USP that gives it every chance for success. This type of strategy can be customized to fit almost any consumable product category: cosmetics, hair care, foodstuffs, supplements, house-hold cleaners, etc. The niche carved out by a clearly defined USP is crucial to successfully penetrating the consumer product market. Make your new product different, special and interesting.

My marketing consulting company reviews hundreds of new product submissions every year. We specialize in consumer product development. The items we analyze run the gamut of product categories. The most creative, prolific and many times, the most commercially exciting are golf, pet or hunting and fishing products.

The reason I have come to believe that there is so much creativity in these areas is passion. Golfers, pet owners and outdoorsman are among the most ardent aficionados in their interests in these hobbies. They will spend almost any amount of money to improve the benefits they derive from their chosen pleasure.

Golfers are manic in their desire to improve their games. We receive numerous training devices, stroke control, bag accessories and novelty golf products annually. Each entrepreneur seems to have developed their innovation based on a perceived need they have identified from their personal play experience. The result is a flood of truly novel devices, some very commercial, that pique these golfers creative juices.

Hunters and fishermen have similar passion for their favorite pastimes. Hunters are driven to get closer to prey, obtain better shot sight lines and get more shots with their rifles or bows. They invest heavily in any gizmo that offers the promise of more action while on the hunt. Fishermen will go to abnormally heightened lengths to catch more fish. Exotic lures, fish finders, bait scents and rod accessories that are new, and offer the angler a possible advantage over the fish are must have items for the tackle box.

Pet owners are especially unique. People that will share the interior of their homes with one or more pets are indeed committed. Recently we introduced a new pet product at the largest pet trade show in the United States. The casual observer could easily imagine the types of products that would be featured in such an exposition. However, walking the show floor was an education. To view the luxury, comfort, fashion and expensiveness of the thousands of specialty products on display was staggering.

Entrepreneur’s that we have worked with over the years are always most passionate when they are trying to commercialize a product that they created to fill a need that they have identified in an important area of their life. Whether it is from employment, a hobby or sport in which they participate or from their household experience, the best ideas seem to evolve from the inventor’s life experience. Passion is to the entrepreneur as fertilizer is to agriculture, essential!

The pet category is huge and growing, There are over 70 million licensed dogs and 45 million cat owners in the United States alone. A niche product that creates demand among these pet lovers has huge upside potential. The market in this product category can be penetrated relatively easily, if the item is truly unique.

Products that are commercially desirable in the categories of golf, hunting, fishing and pet care/accessories also enjoy huge international distribution potential. Distributors, partners and licensees are available for country and continent distribution pacts. These parties will buy the products in bulk quantities from inventors and handle in-market sales, warehousing and business operations.

In many product categories there are 800-pound gorillas (competitors) that present daunting hurdles to new entrepreneurs. The golf, hunting/fishing products and pet product areas are much more sliced up. They have lower barriers to entry and the main players are typically more specialized in their product strengths. This provides greater opportunities for entrepreneurs to secure shelf space and promotional features.

The time has never been more exciting for the market to absorb truly fresh, innovative new specialty products in these and many other categories. The inventive mind, driven by zeal for a hobby or identified need, can be successful and significantly change the course of their life while providing real product performance benefits to consumers of their inventions. The best time to move is always now.

The first issue we see nascent entrepreneurs almost universally attempt to address is the perceived need for working capital. When we ask how much investment they believe is required to get their product to market, they never can justify what they identify as their magic number. I have yet to read a business plan that can justify the assumptions that are utilized to support the capital investment being sought, ever, and I read dozens of business plans each month.

My consulting firm reviews hundreds of new product ideas every year. Many have wonderful commercial prospects. However, almost none of the entrepreneurs offering these opportunities for funding have considered all of the possible avenues available to launch their idea. Funding is the “Holy Grail” in the eye of most entrepreneurs, and yet, a capital raise is the single hardest route they can attempt to utilize.

Investors, unless family or friends, demand a very high level of due diligence before they will stage a capital investment. Strong management, a clearly identifiable Unique Selling Proposition (USP), first mover advantage and a 35% return on invested capital kicking in between months 24 and 36 of operation are the basic guidelines typically utilized when underwriting opportunities. These are standards that very few entrepreneurs and inventors can achieve.

There are many ways to “bootstrap” new products or services before seeking a financing round. They are not glamorous, more like the old parable of the tortoise and hare. These strategies require the oldest trait known to inventive man: simple hard work!

Here is an example of a product that we recently “bootstrapped” to a successful market launch, and subsequent funding relationship. I received a call from a gentleman who owned a construction business. After initial platitudes, he advised me that he had created the world’s greatest barbecue sauce. We receive a lot of food products for review, and every single one is accompanied by the old bromide, “ it’s the best in the world”. I was wary.

Mr. Barbecue Sauce sent me a box of his three sauces to sample. They were very tasty. I advised him that the taste was surely excellent and potentially commercial but that he would have to utilize more of a “guerilla” marketing strategy than his hoped for investor funding round. We wrangled for several months. He approached other consultants and food industry experts before finally coming back to us and agreeing that he needed to utilize a “plan B”.

We contracted to write and execute a business plan for the launch of the sauces. We engaged the services of a dietician, a licensed food product private label source, a graphic designer and a packaging resource. We perfected the label statements and content values of the product. Then we conducted a focus group, obtained testimonials for attribution, and prepared sales collateral.

When the product, packaging and sales materials were market-ready we approached independent and regional purveyors of high-end gourmet food products. These types of retailers are much easier to work with, barriers to obtaining shelf space are small and they are keen to enjoy exclusive distribution of select items. Each door that was initially opened agreed to a schedule of product samplings. We set up a table on an aisle end cap, cooked top quality sausages and asked shoppers to choose which of the three styles of sauce they would prefer on their taste sample. We had an inventory of product on the end cap gondola with a special introductory price.

The results were gratifying and confirmed our assumptions that the barbecue sauces were truly commercial and consumer acceptance would be strong. The samplings lead to strong initial sales, but much more importantly, in subsequent weeks repeat sales began to grow without the aid of sampling.
Geographically, the client fanned out to the nearest markets and repeated the same limited, controlled roll out strategy. The results were always the same, a bit of a cult product was beginning to germinate.

For most of the first year of distribution we utilized the “tortoise and hare” approach. We then identified a gourmet product trade show in Orlando, took a stand and sampled the sauces just as we had in the first local gourmet products stores in the owners hometown. The difference is this instance, was that we were sampling, and taking orders from retailers from all over the United States and internationally, key decision makers in the gourmet product industry. Also, because the product was positioned as a gourmet foodstuff, price points reflected the sauces higher perceived value and the products were not buffeted by mass market discounting.

The entrepreneur had invested some reasonable amount of his own money, but this was mitigated by the go-slow approach we had undertaken. His initial sales funded the controlled rollout of the sauces to additional regional markets. He had not diluted a single percentage of his ownership by taking on investment partners. The growing order book from new retailers and repeat purchase orders were valued by his bank and he was introduced to the merchant bank division to establish a line of working capital.

Mr. Barbecue Sauce came to us with the notion that he needed $350,000 to fund the launch of his enterprise. As we initially quizzed him, he realized that he would really need to raise more like $1.2 million to realize his goal. By being open to alternative ideas, he avoided a huge pitfall that most entrepreneurs fall in too: raising $350,000 and failing is expensive, raising $1.2 million in order to insure success is cheap.

In this case, Mr. Barbecue Sauce was fortunate that there was an alternative strategy readily available to customize for his product. He mitigated risk, limited financial exposure, test marketed the product, extrapolated market potential based on real sales numbers and enjoyed the secure knowledge that the product was commercially viable without being at the mercy of investors demanding strict performance markers be constantly achieved.

Most entrepreneurs with truly commercial projects have many more options available to them than they ever consider. It is amazing how few projects are really fundable, and yet, investor funding is almost always the preferred route they choose to undertake. “Bootstrapping” is almost always the last alternative considered. Successful inventors, entrepreneurs and small businesses will always do whatever is legally necessary to achieve success. Anything less is the equivalent of dreaming.

The hundreds of entrepreneurs, inventors and small businesses that approach my marketing consulting firm each year with new product ideas all confront the same, basic hurdles in attempting to achieve commercial success. Issue number one, they perceive, is how to fund the project. Issue number two, how to market their product.

Let’s review the marketing options. Invariably, the bulk of the entities we work with approach marketing with the belief that they need to immediately place their product in big box retailers. This is a laudable long-term goal, but almost always would be the kiss of death for new products and startup companies.

Big box retailers are exceedingly demanding in requiring huge levels of logistical support. The technology required to simply process orders, data entry, shipping, receiving and billing is highly technical and specific to each chain. The software and systems required to communicate with these giants can be prohibitively expensive for new, small vendors. These are just the logistical hurdles. The sell-through and marketing challenges are much more difficult to conquer.

The alternative to running off to Best Buy or Wal-Mart is to utilize “guerilla marketing” strategies to mitigate expense, lower risk and insure that the new product has a fair opportunity to achieve success. In recent years we have begun to use a “backdoor strategy” to push products into big box store distribution without confronting the up-front challenges that are so daunting for new companies.

Here is an example. Recently we had a dentist approach our consulting firm with a very novel stylized toothbrush. He had deduced from his dental practice that people typically did not brush for three minutes, twice daily, as recommended by the American Dental Association. They really did not know how long they brushed, but the gum and tooth problems he was confronting in his patients indicated they were not brushing enough each day. His new toothbrush was cleverly designed to address this deficiency in oral wellness.

The dentist typically wanted us to create a marketing strategy for the toothbrush that would place the units on mass-market store shelves for the launch. We explained the difficulties, risks and expenses involved in such a strategy and why he should consider alternatives. This was when we described the “backdoor” option.

Big box chains have local and regional management structures. Most people believe that all new items are purchased through home office buyers or merchants. For example, Bentonville, AK is the home office for Wal-Mart. Troy, MI is the buying office for K-Mart. JC Penney is bought out of Plano, TX. Walgreen is located in Deerfield, IL. The Kroger Company is located in Cincinnati, OH.

Each of these, and other national chains in every retail category, have local managers that have the authority to bring product into their doors on a local basis. Few people realize this. These local, regional managers can cut purchase orders and by-pass the national buying process that can be so vexing.

We packaged the novel toothbrush, had our graphic designer create a pop-up shelf display with a header card, created sales collateral and presented the item to the regional manager of a national drug store chain. He was responsible for 36 stores in two southeastern states. He loved the item and even commented, “we love to show the home office that they miss on too many neat products”. We left the meeting with a hand written purchase order for 144 pieces of the toothbrush for each store.

To support the launch of the product we wrote copy for a 30-second television spot with a tag for the drug chain. We went to the local cable television studio and they produced the spot for nothing, in lieu of our buying a small cable spot schedule. The dentist, in his smock, was the on air expert detailing the product.

The product was shipped to the 36 individual stores and the regional manager had forwarded a merchandising directive to each store manager. He advised the product was scheduled for delivery, end cap display was to be provided and that there was cable television buy to support the launch. We hired a college student to get to the stores and make sure the merchandise was prominently displayed and rotated.

Every few days we checked in with the regional manager and he provided sales updates. Within a week, he was able to project turnover and re-order needs. As soon as we secured re-orders, we had the regional manager call the home office with his sell-through report. Within two months we were invited into the buying office for a corporate presentation and to plan a national product launch.

We have used this “backdoor approach” a number of times with different products in different retail channels. It works. Local managers love to take successes, their discoveries, to the home office to prove their mettle. Our clients are in a much stronger position to negotiate terms with national retailers when we have already proven sell-through success on local, test market basis. It also enables us to extrapolate chain wide sales projections based on hard numbers, not best guess assumptions. This is a powerful strategy and many more entrepreneurs should take advantage of this approach that mitigates their exposure.

Licensing, bootstrapping, partnering, joint venturing and receivable financing/factoring are other alternative strategies that can be employed to launch new products. The most successful entrepreneurs overturn every stone to find the one route that will get their idea into play. Keeping all options open is essential if you are to realize your goals.

General Motors, Ford and Chrysler, the historic “Big 3” American automobile manufacturers are on a deathwatch. Their collective futures appear to be solely dependent on the political whims of the United States Congress. As they burn cash, are strangled by huge legacy labor obligations, confront perceived quality issues and offer cars that are out of step with consumer tastes and needs, the future looks bleak for each.

There are many reasons for the demise of these legendary manufacturing behemoths. I believe the most important cause is that for too long they did not emphasize unique, elegant design. It does not cost any more to make an ugly car than a handsome car. When I sit at a traffic light today I cannot differentiate one American model from another. As a child growing up in 1950’s America, I clearly remember going for Sunday rides and identifying every car make by the rake of the fenders, the unique headlight treatment, grille fascia and the vivid two-tone sherbet colored paint jobs specific to each model. What happened?

Design in product development is crucial to product desirability. A Krups toaster is more aesthetically pleasant than a pedestrian Emerson model. An Italian leather sofa is typically more stylized and desirable than a chain store sofa offering. Apple computers are more visibly enticing than their competitors units. Who would not rather drive a Smart car than a Geo Metro?

The most desirable design features are usually simple. In industrial design the term “elegantly simple” is used regularly to denote product improvements that are not overbearing or complex. This concept is a modern adaptation of “Occam’s Razor”, a theorem proposed by an ancient monk that the most useful solution to problems is almost always the simplest solution.

There are many wonderful examples of designers of that have enjoyed great success by employing “elegant simplicity”. One of my favorites is the classic modern jewelry designer and artist, Elsa Peretti. Her body of work is a classic collection of “less is more”.

Ms. Peretti, born in Florence, but residing in New York, has been a fixture on the international jewelry design scene for over 30 years. She became a principal designer for Tiffany in the 1970’s and famously collaborated with fashion designers Halston and Giorgio de Saint Angelo to accessorize their most famous haute couture fashion collections.

Her most recognized and lasting design is the “Peretti Floating Heart”. The simplicity of the piece is enhanced by the undulating wavy cleave that is inherent in the object. The heart seems to float and engenders a feeling of warmth that connoisseur’s have valued for decades. The “ Peretti Floating Heart” has been a mainstay in Tiffany’s stores and catalogues and been offered in dozens of styles, pieces and combinations since it’s initial presentation. The timeless influence of this design alone would insure Elsa Peretti’s place as one of the great artisan designers in history.

When Halston began work on his eponymous fragrance brand he turned to Elsa Peretti for inspiration. Her adaptation of the “Peretti Floating Heart” into the stylized sculpture that became the Halston perfume bottle is considered one of the classic designs in the history of the fragrance industry. It sells briskly to this day.

Ms. Peretti, like Raymond Loewy, Pininfarina, Felini and Erte created design, art, and fashion that is timeless. These artists realized that form and function are actually one joint element that can insure commercial success. We forget this at our peril. Just look at the current situation of the “Big 3”.

When we review new product submissions at our marketing consulting firm we apply a simple methodology to measure potential commercial success. Does the item adhere to the basic principal of “Occam’s Razor”?
Are the features and benefits inherent in the submitted item an advance over existing products in the space? Is the form and design distinctive enough to clearly differentiate the item from competition? These are only a few of the elements we review when grading opportunities.

I was most fortunate to work as an executive in the cosmetic and perfume industry in the 1970’s and 1980’s, the “Golden Years” for creativity in that wonderful business. That was the era before the immensely destructive wave of retail consolidations and corporate mergers and buyouts that has severely crimped innovation in the years since. My experience was blessedly timed to coincide with an explosion of entrepreneurial activity.

The beauty industry gave me an opportunity to work with retailers, artisan craftsman and component vendors from all over the world. One of the most rewarding and enjoyable collaborations I experienced was working with Pierre Dinand to create an original perfume flacon for a new scent I was launching.

In the world of perfumery, Pierre Dinand is a living legend. Over half of the perfume units sold around the world to this day are packaged in customized, crafted bottles designed by Mr. Dinand. He has uniquely sculpted over 500 flacons for some of the most successful and famous perfume brands in the world. Opium (Yves St. Laurent), Eternity (Calvin Klein), Fendi, Valentino, Azzaro Pour Homme, Rochas, Armani, Guerlain and Givenchy are only a tiny sample of the brands he has designed for.

Pierre Dinand works in a light, airy atelier in Paris. When Mr. Dinand accepts a commission to create an original flacon he initially receives a sample of the scent to be contained in his creation. He interviews the perfumer, seeking to ascertain the notes and moods the perfume is meant to convey to the consumer. Dinand lives with the scent until his mood has been piqued and he forms a creative template for the initial silhouette he imagines.

Mr. Dinand is an internationally acclaimed sculptor. He uses favored sculpting techniques to generate initial concept pieces. The production of molding tools for the glass and the manufacturing process must be considered when crafting the prototypes. After drawings, clay models and initial acrylic pieces are sculpted the client is brought in to critique and review the early prototypes.
The process is continued until all issues regarding aesthetics, design, tooling, production and breakage are satisfactorily addressed. The closure is often the most difficult, detailed component in a perfume flacon. The closure must have the most exact tolerance to contain the liquid (which is prone to leakage) and can add significant costs to the bill of materials.

Mr. Dinand remains involved in all aspects of the packaging of the scent until the product is on counter. He appears at press presentations, will attend key trade shows for launch purposes, meet with major buyers and lend his considerable personal network of associations whenever necessary to assist a brands success in the international marketplace. He is a true professional and the roster of hugely successful brands he has creatively inspired is testament to his genius.

Pierre Dinand has also enjoyed great success as a mainstream, consumer product container designer. One of the most famous packages he crafted is the world famous orb bottle for the popular soft drink Orangina. The ubiquitous Orangina shape is renowned around the world and is further proof that this design giant digs deep to understand the needs of every client he services.

The world of high-end perfume is populated with artisans that demand the highest levels of quality, craftsmanship and creativity. Corners are never cut in the pursuit of delivery of the perfect scent. Closure, bottle, box and coffret graphics, tester units, sales collateral, sampling and signage are all absolutely essential elements necessary to present the scent in the most exclusive presentation possible.

I have launched a number of fragrances, skin care lines, hair care programs, color cosmetics, bath and body ranges, nail care, hand and foot care brands over the years. Collaborating with top craftsman is essential in order to properly position and differentiate new products. Working with an old-world artisan such as Pierre Dinand is rewarding, and refreshing in a modern world where attention to luxury, detail and styling is almost a lost art.

The stunning growth of the high-end luxury perfume business in the last two decades has been centered in the celebrity endorser, designer category. Actresses, athletes, models and fashion designers have introduced dozens of new scents; each seeking to lure consumers based on the aura created by the endorsing personality.

Whether you admire Michael Jordan’s basketball skills, Narciso Rodriguez’ modernist Spanish designs or Jennifer Lopez’ singing or acting talents, the marketers of these fragrance brands seek to profit from the perceived lifestyle allure of their licensee’s. What very few people realize is that branded fragrances are rarely, if ever, actually created by the endorser.

The perfume industry is a multi-billion dollar international enterprise. The marketers of branded fragrance products, however, rarely, if ever, develop and produce their own scents. This is a specialty business handled by large essential oil houses like IFF, Robertet, and Givaudan. These companies not only formulate scents, but they harvest and source the flora, fauna and the exotic natural ingredients that provide the base for their fragrances. Many of these biologically diverse plants and animal by-products are rare, expensive and fragile, requiring a great deal of special handling and knowledge.

An example is the whale by-product ambergris. Whales are not harvested to obtain ambergris. This is skimmed from the surface of the ocean, above swimming pods of whales, Ambergris is simply whale vomit. It is exceedingly valuable and crucial as a component in many exotic scent bases.

The high cost of perfume is attributed to the expense of obtaining essential oils from rare and expensive plants. Rare orchids can yield only a few drops of oil per plant harvested and processed. The processing of essential oils is its own industry.

Companies like Estee Lauder, Elizabeth Arden and Lancome do not produce any of their own fragrances. They typically meet with perfume houses such as Givaudan, provide guidance as to their desired scent direction, and then await and evaluate submissions from the integrated houses chosen to bid on the project. Once a favored prototype scent is chosen then the perfume house is contracted to perfect the scent and produce the oils.

The creation of perfume is part science, part marketing, part branding, and a whole lot of art. The art of designing unique, commercial fragrances is entrusted to the “nose” retained by the perfume house. “Noses” are rare, coddled, gifted and possess a talent so unusual that there are only a few recognized “noses” in the world at any given time.

I have had the good fortune to work with one of the greatest, most successful “noses” of the second half of the 20th century. Francis Camail is a legend in the world of creative perfumery. The list of his achievements is stunning. Watching and experiencing his work is to view the efforts of a “master”.

Mr. Camail, working from his laboratory in Grasse, France has been the creative genius behind Annick Goutal, Revlon’s Charlie (at one time the most popular scent in the world), Giorgio (the most profitable brand of the 1980’s), Estee Lauder’s Aliage, Eternity (Calvin Klein), Ivoire (Pierre Balmain) and Bond #9. These are only a few of the brands that have germinated from his ability to create scents that consumer’s desire and loyally purchase on a repeat basis.

Mr. Camail is unique in that he is an independent contractor hired out by large, international perfume houses on a per job contract basis. His reputation is so powerful that he has the ability to be exceedingly selective in the clients he chooses to work with. To view the process he utilizes to layer, build and nurture various top notes, dry notes and a final bouquet is to experience a true artisan master at work.

The creative process necessary to produce luxury perfumery is an old-world, artisan craftsman skill that can not be taught. Francis Camail does employ assistants and interns, as do most other “noses”. However, very few of them, if any, ever go on to successfully conquer the mystical world of exotic fragrance. His skills are apparently God given.

In a world of mass production and industrialization, it is reassuring to know that skills such as those provided by perfumery “noses” are still extant, and essential. The world still has nooks and crannies that appreciate and value craft and artisan skills and abilities.

Today we know Gillette to be one of the world’s most successful and highly respected consumer product brand names. The Gillette safety razor is ubiquitous in homes all over the world. The Company is now owned by Proctor & Gamble and continues to introduce new shaving innovations on a regular basis.

King C. Gillette was a travelling salesman, a bit of a bon vivant and a very ambitious entrepreneur. During his travels he fortuitously made the acquaintance of William Painter. Mr. Painter was the inventor of the Crown Cork bottle sealer. His invention was the impetus for the Crown Cork & Seal Company, hugely successful to this day. The inventor was almost messianic in his belief that the key to any successful invention was the ability to repeatedly re-sell the product to the same users. Mr. Gillette became enamored of the concept of “planned obsolescence” and began his quest for an invention that he could commercialize.

One day in 1895 while shaving Mr. Gillette had an idea. At that time shaving was an ungainly affair. The process required a bowl of drawn water, soap, brush, and a straight razor that needed to continually be stropped to maintain sharpness. King Gillette’s brainstorm was to design a razor that held a disposable steel blade. He would sell the razor as a fixture and the blades as refill products, over and over to the same customers.

There was a technical problem, however, that Gillette had to overcome. At that time it was considered near impossible to create a small metal blade that would hold a sharp edge for multiple shaves and be inexpensive. It took six years and the engineering skills of MIT graduate William Nickerson to create the technology to mass-produce disposable razor blades.

King Gillette was nothing if not dogged. However, it took the entry of the United States army into World War I to popularize the Gillette Safety Razor.

Mr. Gillette’s company was able to secure a contract with the government to distribute Gillette Safety Razors to every soldier. By the end of the war 3.5 millions razors and 32 million razor blades had been distributed to soldiers in the field.

When the Armistice to end the war was signed and the American soldiers returned home they imported the Gillette shaving habit with them. There was immediate demand created across the country for Gillette products. The future success of the company was assured and the Gillette brand became a cornerstone of the American consumer product marketplace.

My consumer product marketing consulting firm reviews hundreds of products each year. Recently we had the opportunity to analyze a wonderful beauty product accessory. The inventor had done a wonderful job of crafting the prototype and the features and benefits of the item were of excellent utility. However, the item was a one-time sale. There was no consumable, resale item included in the offering.

We advised the inventor of this obvious, limiting deficiency in the project. Retailers are reluctant to carry single items. Sales would initially spike and then dramatically slow as market penetration occurred. We offered to create a liquid “activator” product to be used in conjunction with the implement. The “activator” would be the razor blade, the hardware implement the equivalent of the Gillette razor.

The “activator” was inexpensive to produce, had huge perceived value, completed and embellished the marketing story and offered retailers and the inventor the opportunity for a steady repeat sales stream. The product is now sold in thousands of beauty salons across the United States and in Europe.

The Gillette sales model is now so common that we take it for granted. “Planned obsolescence” is ubiquitous and insures brand loyalty for many years. The key to building a successful brand that consumers treat as generic is often to mate a fixture or implement with a consumable item. Gillette often gives away the razor to insure that the consumer must purchase their proprietary razor blades or cartridges. Ambitious entrepreneurs should always seek to extend their products reach by incorporating King Gillette’s model.

During the Civil War years of the 1860’s the Seventh Day Adventists opened the original Western Health Reform Institute in Battle Creek, Michigan. This religious group was keenly interested in healthy living and undertook some of the earliest research on the benefits of foodstuffs naturally derived from Native American crops. The result was their creation of the earliest breakfast cereals.

For the rest of the 19th century the Seventh Day Adventists consumed their breakfast cereals made from oats, corn, wheat and sorghum. They never really attempted to fully commercialize their recipes for these cereals.

Their original health institute became the famous Battle Creek Sanitarium. One of the doctors at the sanitarium was named W. K. Kellogg. Dr. Kellogg, a devoted follower of the Seventh Day Adventists, was keenly interested in healthy diet and the effect of diet on sick patients. While seeking a foodstuff to replace bread in the diet of his patients, he stumbled into an answer that created an iconic American industry.

Dr. Kellog was boiling a pot of water that contained wheat. His attention became diverted and the wheat overcooked, thus softening. He removed the softened wheat and let it dry. When he returned later he found that the overcooked wheat had begun to turn brittle. He began to break apart the wheat and it broke off into little flakes. Amazingly, the wheat flakes had a most enticing taste. Dr. Kellogg had accidentally invented the process essential to mass-produce wheat cereals and corn flakes.

Today we know the Kellogg Company as one of America’s great brand names and purveyors of numerous popular breakfast cereals. The Kellogg Company was later followed by C. W. Post and General Mills in making the prepackaged breakfast cereal industry one that is uniquely American.

Dr. Kellogg spent the rest of his life seeking to create healthy products that would improve and extend life. However, the accidental discovery of the process necessary to produce dry cereals is his great legacy. Every day millions of people all over the world start their day with a tasty, nutritious bowl of cereal that owes its provenance to an overcooked pot of wheat.

Many great inventions and product improvements owe their existence to accidents, mistakes that open new doors and plain dumb luck. The key to commercially profiting from these errors is to always keep an open mind in the face of the unexpected. Dr. Kellogg was looking for a new type of bread. His mistake in overcooking a pot of wheat has contributed to making his name one of the most famous in the world.

Many sterling companies have attained great heights in the last 100 years, only to plateau, decline and disappear. Bethlehem Steel, American Motors, Montgomery Ward, PanAm, TWA, Faberge and Marshall Field are prime examples of famous companies that no longer exist after enjoying generations of success. There are hundreds of other examples. Why do organizations expire after gathering such power?

Currently the three American automobile giants are staring at an agonizing death by a thousand cuts. Ford, General Motors and Chrysler are case studies in how to lose direction and implode. They have not responded to changing market conditions, agreed to unrealistic and unfavorable labor and dealer contracts, been indifferent to product styling and let the competition assume a perceived advantage in quality and price. For these, and many more reasons, their future is very hazy.

At one time, these companies were considered great examples of superior American management. Their international reputations were among the highest enjoyed by business anywhere. One of the great suppliers to the auto manufacturers was Firestone Rubber Company. Firestone’s tale of decline is cautionary.

Leonard Firestone built his eponymous tire and rubber production company during the early 20th century, riding the coattails of the burgeoning American automobile industry. Firestone was the gold standard in tire production. Its management was considered the best of the five American tire manufacturers. As the century progressed, the company prospered greatly but grew arrogant. The business developed a strange aversion to new product development.

In the 1960’s Michelin, a French tire manufacturer, developed the first radial tire. Firestone decided to stick with belted tires. The advantages of radial tires were soon obvious and the world’s auto companies gravitated quickly to these new tires. Firestone’s American competitors Goodyear, Uniroyal, General Tire and tiny B. F. Goodrich tried to compete by introducing belted bias tire technology. They were unsuccessful in this effort and soon decided to jump into the radial business. The great Firestone Company was alone, and very late to get into the radial game.

It took Firestone until 1972 to attempt to market radial tires. A major mistake was made when the management of Firestone decided to simply rework belted tire production lines to produce radials. They decided to take this route to minimize capital expenditures. Nevertheless the historic goodwill the company had accrued made Firestone Steel Built radials the fastest growing tire in the world in the 1970’s. Unfortunately the company had compromised quality in their radial tire production process. The result was the largest tire recall in history in 1978 because of safety concerns. The company became a favorite target of consumer groups.

By 1988 Firestone was exhausted from the radial battles. The Firestone Tire and Rubber Company was purchased that year by the giant Japanese tire manufacturer; Bridgestone. This left only Goodyear as an American owned producer of tires. Why had an iconic, historically well managed company, reacted so disastrously to competition and new technology?

The best answer, and it applies to all fallen giants, is active inertia. Large companies become inert, listless, and ponderous. Their historic corporate relationships become blinders. Values harden into dogma’s, we have always succeeded doing things this way, so we will continue to do things this way. Corporate processes and policies harden into routines.

Leonard Firestone was a visionary. So was Charles Revson (Revlon), Alfred Sloan the architect of General Motors, Henry Ford, Juan Trippe at PanAm and Howard Hughes at TWA. These companies were their heritage. As the businesses evolved into public companies and the entrepreneurs who had had the visions to create and nurture their success retired or died a corporate malaise can set in. Businesses die if this is allowed to happen.

The United States government is the best possible example of failure. This enterprise is structured to fail. It is wasteful, duplicitous, mission confused and counterproductive. Money cannot be accounted for, results are not quantifiable and responsibility for program failures is never assigned. The government is not created to solve problems, it is organized to institutionalize and perpetuate problems. This is why the bureaucracy enjoys never ending growth, even as so little is ever accomplished.

History is the best teacher. Those who do not learn the lessons of history are bound to repeat their mistakes. This piece could have been written about any one of a hundred formerly iconic brands or businesses that failed. The failures are readily available as teaching tools. Hopefully our leaders will start to review some of these case histories before deciding which industries are to be winners and losers.